RENO -- A federal appeals court Thursday upheld the state engineer's approval of the U.S. Fish and Wildlife Service's transfer of water from a century-old irrigation project to wetlands and marshes in the Lahontan Valley.
The ruling by a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco upheld a lower court ruling by U.S. District Judge Lloyd George in Nevada allowing the transfers of water rights from willing sellers to parts of the Stillwater National Wildlife Refuge.
The decision rejects claims by the city of Fallon and Churchill County that the water transfers threaten the public interest and interfere with existing water rights.
"We hold that the state engineer has broad discretion under Nevada law to determine whether a change in place of use of existing water rights will have a detrimental impact on the public interest or whether a hydrological or other study is necessary before approving such a transfer," the court said.
The case stems from the 1990 Negotiated Truckee River Settlement Act, the latest in an ongoing tug-of-war over water and the Newlands Irrigation Project established under the Federal Reclamation Act in 1902.
Among other things, the settlement authorized the Fish and Wildfire Service to purchase water rights from willing sellers to use the water to support 25,000 acres of wetlands in the Lahontan Valley 70 miles east of Reno.
The wetlands and marshes had been shrinking over the years -- at times drying up completely -- largely because of increased demand and agriculture diversions from upstream users of the Truckee and Carson rivers, court records said.
Under the negotiated settlement, the Fish and Wildlife Service purchased 2,855 acre-feet of water rights and submitted eight applications to the state engineer to transfer the location where the water will be used.
It was the first of about 75,000 acre-feet the agency estimates it will need to acquire over 20 years to sustain the wetlands called for in the settlement.
The wildlife refuge 25 miles northeast of Fallon is home to 160 bird species. More than 350,000 waterfowl visit in a typical spring and fall.
Fallon and Churchill County officials challenged the applications, arguing the transfers would reduce groundwater recharge, jeopardizing municipal and private water supplies.
They also argued Fish and Wildlife Service should be required to conduct an extensive environmental impact statement under the National Environmental Policy Act to analyze the cumulative effect the water rights acquisitions and transfer would have on groundwater supplies and the community.
In its ruling, the appeals court panel said, "As a preliminary matter, we agree with the district court and state engineer's finding that the eight transfers would not conflict with existing water rights is supported by substantial evidence."
The opinion also agreed with the state engineer's finding that it was not his place -- but rather that of the U.S. secretary of interior -- to determine whether an environmental impact statement was needed.
The decision noted that two of the eight transfer applications involved parcels "no longer capable of being used for irrigation purposes." Therefore, changing the place of use "would have no effect on continued recharge or groundwater levels."
Regarding the remaining six applications, the court said there was ample evidence for the state engineer's finding that the "existing places of use were not within a significant recharge area," and "would not unreasonably or adversely affect recharge of the aquifers from which the city draws its municipal water."
It added that Fallon and the county "failed to prove that any change in groundwater level would be unreasonable."
The court also said the state engineer adhered to policies drafted in a previous case and endorsed by the Nevada Supreme Court outlining guidelines defining public interest.
The opinion noted that while the city and county are concerned about the combined effect of all the acquisitions and transfers authorized by the settlement, the state engineer was correct to decide each individual application on its own merits.